WEALTH HEALTH: A personal story to make you more vigilant about fraud

Friday

Because the institution had initiated contact with her, the representative wanted to make sure he had reached the right person. He sent a text code, read her the address on the account, asked a security question – and then a second – and was planning to cancel her debit card and issue a new one immediately with a pre-set personal identification number. He was setting up alerts for future fraudulent charges, and went over some fraudulent charges and asking if she made them.

And while this was happening, her phone rang.

It’s Bank of America calling; said so, right on the caller ID

The initial representative says this new call was generated by the actions he has taken and encourages her to ignore it. He’s telling her of the importance of moving money to avoid fraud, because this is a bank account – and not a credit card – and once the money is gone, it’s not coming back.

That’s roughly where Whitney hung up, listened to the message left on the second call and heard the fraud alert.

In the next few minutes, Whitney got on the phone with real Bank of America representatives and learned that the bad guys behind the first call had moved $3,000 from her savings to her checking account and made two attempts to spend nearly all of that cash, one of which was “pending.”

It sounds like some crazy financial version of the movie “Inception” – a phone call within a phone call within a scam – but it was very real and frightening. At the end of that day, Whitney spent three hours protecting her accounts, and the money that the bad guys had moved was inaccessible for several days until it was returned to her account.

My daughter’s close call represents a warning shot all consumers can learn from; it was impossible to grow up in my household without having heard tales of financial frauds and scams, to have been raised with a natural “they’re out to get you” skepticism.

She was prepared for what happened, yet she was nearly fooled.

Scammers have upped their game.

That means consumers must be even more vigilant.

“The bad guys are increasingly more sophisticated; they have enough information on you to sound credible, and they need you to give them the rest and are skilled at getting you to do it,” said Greg McBride, chief financial analyst at Bankrate.com. “Be very suspicious when someone calls, texts or emails asking for personal information. Be even more alarmed when they’re asking about a bank account, because the money could be drained from your account before you realize you are defrauded and you may not be able to get it back.”

To its credit, Bank of America – like most financial institutions these days – takes significant steps to guard against fraud. The banking giant’s web site has a tremendous primer on various phishing scams – the phone, text and e-mail frauds akin to what my daughter faced – but those may not be front-and-center when you’re knee-deep into the call from the bad guys.

Whitney asked what she could have done to help. These are basic tips for every consumer:

Do a web search on the phone number.

A simple Google search would have showed Whitney that the number had been used in scam calls.

While it’s not completely foolproof – neither is only answering calls from numbers/names you recognize because those, too, can be faked on Caller ID – don’t be shy about hanging up, finding the institution’s fraud hotline (every institution seems to have one) and contacting them directly.

Make your security answers hard, less obvious and different, so that you must check yourself.

Someone trying to steal your ID wants as much information about you as possible. The caller told Whitney she had the answer wrong on a question about her best friend’s name, and therefore asked for more information; Whitney couldn’t recall her questions or the specific answers.

Just as you store passwords and account details in a safe space, so should you keep the security questions. Moreover, use not-so-obvious questions that force you to look rather than relying on memory.

Non-obvious questions can be answered in two ways. Thus, if asked your “favorite sports team” you could say “Boston” or “Red Sox” or Boston Red Sox.”

By answering the question different ways (and I’m not a baseball fan, folks, so that’s not my answer), I force myself to check both the questions and answers as an extra fail-safe against fraud.

Close affected accounts, get new cards, new codes and new security questions.

Obviously, this happens after trouble – Whitney has done it – but you need to ensure that whatever information the bad guys got on you (and they had her address and other personal information before they started) can’t be used going forward. While most experts don’t go so far as to suggest changing banks – because it may not be practical – consider it if the move can be accomplished easily.

Freeze and monitor.

There is a difference between bank fraud – what Whitney was facing – credit scams and identity theft, but any time you fear a breach in one area, cover your assets in all of them.

Having been affected by fraud, you should be able to get an extra credit report for free. Take advantage of it; combined with the free reports you can get every year on annualcreditreport.com, it will help you ensure that no one is opening any new accounts in your name.

Credit freezes also can be done for free, and will stop anyone – yourself included – from opening new accounts. You need to know how to thaw things for those times when you need additional credit, but the process is not hard.

These links should allow you to freeze your credit quickly and easily:

Equifax — equifax.com/personal/credit-report-services

Experian — experian.com/ncaconline/freeze

TransUnion —transunion.com/credit-freeze

Chuck Jaffe of Cohasset is a nationally syndicated financial columnist and the host of "MoneyLife with Chuck Jaffe." Reach him at itschuckjaffe@gmail.com or tune in to http://moneylifeshow.com.

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